Surprise! Pop Rocks, Netflix and Innovation

“Has everyone had Pop Rocks before?” Explosive packets of watermelon and raspberry candy sailed through the air. “That was the first time I personally experienced a breakthrough. I mean, I didn’t know candy could do that! That’s what innovation is—it challenges our assumptions about what we think is possible.”

At this year’s Boston Seafood Show, best-selling author Soren Kaplan presented the keynote address on innovation. Now, innovation can be a nebulous subject. What exactly is it and how do you create a company culture that fosters innovation? There have never been more articles, books and resources on the topic; last year, the word “innovation” was mentioned 33,528 times in quarterly and annual reports. So that means we’ve figured it out, right? Not quite. Kaplan pointed to some recent casualties of disruptive innovation: Borders, Blackberry, Blockbuster, Britannica. “What’s the lesson from these companies? They didn’t change, so they got stuck. Also, don’t start your company with the letter B,” quipped Kaplan.

At its core, innovation is about creating positive surprises. The same way that Pop Rocks expanded your idea of what candy can do, iPhones created an entirely new concept for cell phones and Netflix reinvented our process for movie rental. We love pleasant surprises and are wired to embrace products and services that provide us with them. On the other hand, businesses generally do NOT like surprises, and actively work to prevent or circumvent change. “Think about those B companies,” said Kaplan. “You could miss opportunities right in front of your face. Surprises are part of the journey of creating breakthroughs. So how do you do it?”

With LEAPS. The first step is to listen. It’s counterintuitive, but you should start by listening to yourself, not the market. “Target never did any market research,” said Kaplan. “No one told them they needed to be the leader of cheap chic, or to partner with Philippe Starck. They lead the market from that position and everyone followed.” Sometimes customers may not know what they want; it’s your job to imagine the possibilities.

Next, you need to explore. Go out and connect to customers to validate your idea. Even better, learn about the perspective of your customer’s customer. Kaplan explained, “If you’re a supplier selling to a wholesaler, take some time to learn about what retailers and restaurants want. If you’re a wholesaler, explore the needs of consumers and diners.”

Kimberly-Clark is the manufacturer for several big household brands: Huggies diapers, Kleenex, Kotex, Scott toilet paper. Mothers comprise a significant part of their target audience, so they decided to explore the needs of moms to gain a better understanding of them. After speaking to the radio host of Mom Talk, they learned something surprising—there are 6 million “mompreneurs” in the US, or mothers who are designing and inventing solutions to parenting problems. What resulted was a brand new program called Huggies MomInspired. Moms with existing businesses can submit their idea for a chance to receive $15,000 in grant money from Kimberly-Clark. The only string is that if the mom ever decides to sell or liquidate the business, Kimberly-Clark has the first right of refusal. In a nutshell, Kimberly-Clark has created a robust R&D program while supporting this entrepreneurial parenting community and promoting their brands.

The next step is to act. Taking small simple steps is better than outlining a rigid plan, where deviating from the plan would be considered failure. Instead, you can figure out the prototype as you go along and adjust as necessary. When Four Seasons launched their website in the 90s, they put up a simple site with lots of photos of their properties and a phone number. At the time, Four Seasons was a luxury business brand, one that wasn’t geared towards leisure travelers. After the website launch, the company noticed a spike in customers calling about vacations, and a Wall Street Journal article was published, lauding the Four Seasons site for being “like we’re already on vacation.” The result? Four Seasons quickly pivoted to become Four Seasons Hotels & Resorts and moved their site global in multiple languages. Rather than fighting, they looked at these unexpected surprises as pointers for future directions.

After acting, you must persist. Bold innovation will undoubtedly entail failure. The question is how you react to failure and whether you let it lead to increased pessimism and bad decisions. When Gatorade first began making energy pouches, the pouches leaked. Rather than looking for someone to fire, they worked even harder to get a better replacement out to the market, establishing them firmly in the market compared to the competition.

Finally, seize opportunities; make the journey part of the surprising destination. Early in the history of Easy Eats, Chuck Templeton tried to pitch his reservation service to famed NYC restauranteur Danny Meyer. Meyer shot him down, saying that his restaurants were full every night, why would he need a reservation service? “For a lot of people, that would feel like a huge failure,” said Kaplan. “But Chuck thought, what doesn’t Danny know? He realized all restauranteurs don’t know who is sitting at their tables.” The end result was Open Table, an electronic reservation book with customer relationship management tools for restaurants. Though it is not obvious to diners, these back-end tools are what gives Open Table the edge over their competition.

How have you created innovation at your company or in your life? What techniques do you use to remain open-minded and humble when encountering surprises?